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PVC market in China suffers larger declines than in India

by Pınar Polat -
by Esra Ersöz -
  • 13/11/2019 (10:08)
A major Taiwanese producer’s decision to cut its December PVC offers to Asia by $10/ton when compared to November was in line with players’ initial expectations.

Prior to the announcement, there were opposite factors in place. On one hand, demand in India started to pick up as players returned to the market from the Diwali holiday while China’s local PVC market was supported by firmer futures prices. On the other hand, both China and India markets were under pressure from rising supplies for deep-sea cargoes from the US and Europe.

Import PVC prices hit multi-month lows but to a larger extent in China

Following the announcement, import PVC prices have reached their lowest levels in the past seven months on CIF China basis and four months on CIF India basis on average, respectively, ChemOrbis Price Index shows.

Along with the December announcement, the downturn has extended into its third month in China while India is facing the second month of weakness after a rollover in October. The relative strength of demand seems to have helped the Indian market post smaller losses.

2019 bucks the trend of the past few years in Asia

ChemOrbis Price Index reveals that the PVC markets in Asia turned up either in October or November in the past few years in line with the return of demand following the end of Diwali holidays. However, this year has been different as the pressure from deep-sea cargoes seems to outstrip demand across the region.

The major’s lead followed by other Far East Asian PVC suppliers

A South Korean producer also announced its December PVC offers to India with a $10/ton decrease from its November offers. Japanese PVC suppliers also reportedly followed the major’s lead and cut their recent offers recently to both China and India markets.

India’s local PVC market was also down before the new pricing

A major local producer in India had cut its offers by INR2000/ton ($28/ton) by late last week. Despite healthier demand in the post-Diwali holiday period, expectations of seeing further reductions on December pricing put pressure on the local market, according to traders.

China’s local PVC market shrugs off lowers Nov offers so far

An opposite scenario was in place for China as the country’s local PVC market has been tracking a stable to firmer trend for the third consecutive week. This was with support from higher futures despite limited demand for PVC applications coupled with the weak sentiment in the import market.

Having a firm start to the week, January PVC futures on the Dalian Commodity Exchange posted a total gain of CNY115/ton ($16/ton) on November 11-12.

Spot VCM, ethylene prices firm in Asia

Another factor that was unable to prevent import PVC prices from falling was firm spot VCM and ethylene prices in Asia.

Spot VCM prices on CFR China basis recovered from their lowest levels in nearly three months over the past week due to tightness while spot ethylene prices with the same terms recently stabilized after rebounding from their lowest levels in more than a decade.
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